Schools rework financials to implement RTE
Those below 20% profitability will suffer a few blows
Over three weeks after the Supreme Court upheld the implementation of Right to Education (RTE) Act in the private unaided schools, the schools say margins will be squeezed depending on the profitability.
Different private schools are at different levels of profitability ranging from 10 to 50%. Those below 20% will bear the blow and those above 20% will comfortably absorb the hit.
Sujit Bhattacharya, director Indus World School Delhi said: "Right now 25% induction of students is at entry level and not in all classes. For the budget schools like us, We are in the range of Rs 2,500 school fee, whereas some big schools are in Rs 6,000 to Rs 12,000. We will try to enhance the capacity of our class to an optimum level because even the fee hike can be exercised to certain extent."
Lina Ashar, Chairperson, Kangaroo Kids Education limited, Mumbai said: "Imagine the 25% direct hit on our revenues. Our vision was to provide 'international quality education' at an affordable 'best value for money' price. This bill means that I need to relook my pricing strategy. Quality always comes at a price. The fear is in due course, it should not start affecting quality even in such - good schools. It is not clear yet what the government will reimburse per child."
Ashar added that though RTE is a great idea, it leaves implementation challenges unanswered- especially for the "international" line of schools.
"The price of real estate and the rent that goes with these properties, followed by an ongoing increase in staffing costs, ever increasing energy and upkeep maintenance costs, the question is where does this stop. In our format where we are so very particular about a low child to teacher ratio- we cannot even increase enrollment per class?," said Ashar.
Private unaided schools are expected to receive a reimbursement from the government for admitting 25% children under RTE. The reimbursement is worked out as: least value among (1) Average per-child-expenditure incurred by the State, (2) Average per-child-expenditure incurred by a Govt. school, and (3) the actual fees/head of the private school. In Delhi, a Private unaided school like Delhi Public School, Springdales, G.D. Goenka etc. will be reimbursed around Rs 1,200/month/child under RTE, which when compared to a fees range of Rs 6,000-12,000/month/child, creates a fees-per-child deficit as high as Rs 5,000-11,000/month/child for a Private school.
Private schools say they can increase the fees by only 10% according to the central government norms. However, as RTE admissions are at the entry level (the class from which a school starts), schools have some flexibility in increasing strength of the other classes to compensate for the weak and disadvantaged sections.
All the schools have to comply to RTE norms till 2013, except for teacher training requirement, which has to be complied till 2015.
Another blow to private unaided schools will be the stringent norms for infrastructure under RTE. Non-complying schools will be initially fined, and eventually face the threat of de-recognition.
The stringent norms are in light of recent studies done by National RTE forum on non-compliance of RTE infrastructure norms in all Government funded and aided schools, suggesting that more than 95% schools are not in compliance with the complete set of norms. This figure does not reflect the quality and usability of these facilities, only their physical availability. The actual situation on the ground is even worse, hence the more stringent norms.
Vijaya Lakshmi Arora, Director, Policy and Advocacy, CRY, adds that there are no guidelines to operationalise the Act. “The challenge will be to change the mindset of teachers and parents. Schools will have to work hard to make a child feel a part of the school and see that dignity of the child is not taken away,” said Arora.
According to an Ernst and Young report on RTE Act, implementation of the same for a period of five years from 2010 would require investments worth around Rs 2.31 lakh crore. Of this, Rs 0.24 lakh crore would need to come from the finance commission’s allocation to state governments. The remaining Rs 2.07 lakh crore would be shared by the Centre and states on a 65:35 basis (90:10 for north-eastern states).